‘Equity round alternative’: B2B software startup lender SaaS Capital raises $128M for 4th fund

Randall Lucas.

The news: SaaS Capital, a lender that provides software-as-a-service startups with alternative financing options to traditional venture capital, raised $128 million for its fourth fund, up from its $75 million third fund raised in 2018.

The model: Founded in 2007, SaaS Capital specializes in providing lines of credit that don’t dilute a company’s cap table, and allows the firm to avoid discussions about valuation or control provisions. Its debt offering is based on a company’s annual recurring revenue, with a stated interest rate. “We provide an option that lets companies continue to grow and thrive, and raise equity when and if they want,” said Randall Lucas, managing director.

The people: Lucas just joined SaaS Capital after stints with Seattle firms Voyager Capital and Lighter Capital, another “alternative VC” firm. He helped start Lighter Capital in 2012 with Rob Belcher, who became managing director at SaaS in 2015. Other managing directors include Stephanie Fortener and Steve Jaffee, who are both based in Ohio. SaaS was founded in by Todd Gardner.

More details: SaaS Capital expects to do 5-to-10 investments per year, writing debt facilities between $2 to $15 million. The firm has financed more than 80 companies to date across industries including healthcare, logistics, collaboration/productivity, and more.

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